The Thai Bond Market Association (ThaiBMA) The Thai Bond Market Association (ThaiBMA) The Thai Bond Market Association (ThaiBMA) is a securities business related association under the Securities and Exchange Commission Act B.E. 2535. Its main purposes are to be a self-regulatory organization (SRO) for a fair and efficient operation of the bond market and to be an information center for the Thai bond market. It also plays functional roles on market development, market convention and standards and being Bond Pricing agency for the industry. In addition, ThaiBMA provides a forum through which industry professionals can response to current issues and play a role in shaping the future of the Thai bond market. Background Although the ThaiBMA was granted a securities business related association and SRO status from the SEC in September 2005, its foundation has started for more than a decade. The first stage of its operation was in November 1994, when it was set up as The Bond Dealers Club (BDC) under the Association of Securities Companies. The BDC played roles as the first and only organized secondary market for bonds and it introduced an electronic bond trading system called ‘Bondnet” for the first time in the history of the Thai bond market. After 3 years of its successful operation, BDC changed its legal status to be in line with its membership structure and to support a more expansive bond market. So it was restructured as the Bond Exchange under the SEC Act and renamed as The Thai Bond Dealing Centre (Thai BDC) in April 1998. The primary roles of the Thai BDC are to facilitate the operation of the secondary market for bond trading and to be a forum for discussing issues on bond market development. One of its missions is to move towards a full self regulatory organization (SRO) to oversee the orderly function of the bond market. ThaiBDC had continuously expanded its functions and had taken active roles in various area of bond market development. In December 2004, the Bond Market Development Committee chaired by the Finance Minister initiated a major reform of the Thai bond market. One of the measures was to centralize the trading platform at the Stock Exchange of Thailand (SET) while ThaiBDC would remain and expand its functions as the SRO and information center for the bond market. Under this policy, ThaiBDC has sold its newly developed electronic trading platform to the SET in 2005. And to reiterate its focus on SRO functions and information center, ThaiBDC with the support from SEC has changed its status and was granted the license of a securities related association under the SEC Act named as “The Thai Bond Market Association (ThaiBMA) ” on September 8, 2005 . ThaiBMA members Membership of ThaiBMA can be classified into 3 types; each of which is subject to different membership fee and requirement; 1. Ordinary member is a financial institution that has the debt trading license (dealer). 2. Extraordinary member is a company that has inter-dealer broker license (IDB). 3. Associate member is provided for a dealer that has monthly average trading value in the past one year less than 100 million baht per month. In December 2020, membership of ThaiBMA consists of 55 commercial banks and securities companies. Roles and functions of Thai BMA ThaiBMA plays key functional roles in four main areas; 1. Self-Regulatory Organization (SRO) ThaiBMA oversees and monitors the conduct of its members in order to ensure fairness and efficiency in debt securities trading. It is committed to retaining the confidence of its membership, regulators and investors. Parts of SRO functions include the following: Perform market monitoring and surveillance to ensure that all trading activities complied with relevant laws and regulation and act as the front line to detect any unfair trading practices. Established Ethics and Code of Conduct for members and traders. Issuing rules and guidelines regarding debt securities trading and good market practice. Responsible for bond trader examination and registration and provide them with ongoing education to enhance their professionalism. Determine enforcement procedure to penalize those who did not comply with the regulation. 2. Bond Information Center and Pricing agency Mandated as the sole information center and pricing agency for the bond market, ThaiBMA is an authorized source for Thai bond market data. It disseminates information in both the primary and secondary market through its website www.thaibma.or.th Both website consists of trading information, bond features, reference yield and relevant market news and regulatory updates. It constantly attempts to improve efficient information service provided to its members and customers. As “Bond Pricing Agency”, ThaiBDC also provides model yield and pricing data for mark-to-market purpose of investors such as mutual funds. This is deemed very useful in the case of illiquid debts securities. 3. Market Convention and Standard As trading in the bond market is mainly over-the-counter rather than on an exchange, ThaiBMA serves to enhance standards within the marketplace through extensive consultation with market participants. Example of convention and standards issued by ThaiBMA are as follow: Establishment of symbols for bond and short-term debt securities. The ThaiBMA (ThaiBDC) symbols have been widely recognized in the market. Standard formula for price / yield calculation for various types of bonds. This helps eliminate discrepancies arising from using different practices. Bond registration standards that meet international practices. 4. Market Development and Education As part of ThaiBMA’s commitment to enhancing market development and professional practice, Thai BMA has developed and implemented several key data essential for market development as follows: Yield Curve and Benchmark Bonds. Thai BMA provides information to the public on the government bond yield curve and benchmark bonds on a daily basis through website and newspaper. Market Education and Promotion. To expand investor understanding of the bond market, Thai BMA provides extensive seminars and training programs for market participants and the general public. It also produces a comprehensive range of publications for the benefits of those involved in the bond market. Financial data innovation. ThaiBDC has initiated financial data innovation such as Zero coupon, Credit spread, Bond Portfolio Analysis, Value-at-risk (VaR) as additional tools for bond investment and portfolio management. Next step As part of the bond market reform policies, SEC and related authorities have implemented several measures to support the roles of ThaiBMA. These measures include a mandatory membership of dealers and Interdealer broker at ThaiBMA. There will also be a requirement on registration of all bonds at ThaiBMA. With the strong support from regulators and members, ThaiBMA can perform to fulfill its commitment and bring in stability and integrity of the bond market in accordance to its objectives.